LEASES

Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For those leases with a term greater than one year, the Company recognizes on the balance sheet at the time of lease commencement or modification a right of use (“RoU”) operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. RoU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company's lease population primarily consists of real estate leases for office space. The Company also has operating leases for various types of furniture and office equipment. For certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease RoU assets and liabilities. For certain lease agreements entered into or reassessed after the adoption of ASC 842, the Company elected to combine the lease and related non-lease components for its operating leases; however, the non-lease components associated with the Company’s operating leases are primarily variable in nature and as such are not included in the determination of the RoU asset and lease liability but are recognized in the period in which the obligation for those payments is incurred.

The Company’s operating leases may include options to extend or terminate the lease, which are not included in the determination of the RoU asset or lease liability unless they are reasonably certain to be exercised. The Company's operating leases have remaining lease terms of one year to 12 years, some of which include options to extend the leases. The Company typically does not include its renewal options in its lease terms for calculating its RoU operating lease asset and lease liability as the renewal options allow the Company to maintain operational flexibility and the Company is not reasonably certain it will exercise these renewal options until close to the initial end date of the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the Company's leases do not provide an implicit rate, we used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

The Company primarily subleases floor space within our New Jersey and New York lease properties to various third parties. The lease term for the subleases typically corresponds to the head lease term.

Balance Sheet Classification of Operating Lease Assets and Liabilities



	Balance Sheet Line Item	March 31, 2019
		(in millions)
Assets
Operating lease asset	Other Assets	$	328
Liabilities
Operating lease liability	Other Liabilities	$	422

The table below summarizes the components of lease costs for the three months ended March 31, 2019.

Lease Costs



	Three Months Ended March 31, 2019
	(in millions)
Operating lease cost	$	53
Variable operating lease cost	$	3
Sublease income	$	(4	)
Short-term lease expense	$	1

Maturities of lease liabilities as of March 31, 2019 are as follows:

Maturities of Lease Liabilities



	March 31, 2019
Operating Leases (1)	(in millions)
2019	$	86
2020	89
2021	84
2022	81
2023	76
Thereafter	84
Total lease payments	500
Less: Interest	(78		)
Present value of lease liabilities	$	422

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(1)	As of March 31, 2019, the Company has additional operating real estate leases that have not yet commenced of approximately $10 million. These operating leases will commence in August 2019 with lease terms of five to ten years.

Weighted Average of Lease Term and Discount Rate



	March 31, 2019
Weighted-average remaining operating lease term (years)	6
Weighted-average discount rate for operating leases	3.15	%

Supplemental cash flow information related to leases was as follows:

Lease Liabilities Information



	Three Months Ended March 31, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21
Non-cash transactions:
Leased assets obtained in exchange for new operating lease liabilities	$	1

The following table presents the Company’s future minimum lease obligation under ASC 840 as of December 31, 2018:



	December 31, 2018
Calendar Year	(in millions)
2019	$	81
2020	$	74
2021	$	69
2022	$	67
2023	$	63
Thereafter	$	66